In this paper, thermomechanical processing of niobium microalloyed steel was performed with the purpose of determining the interaction between niobium precipitates and dislocations, as well as determining the influence of the temperature of final deformation on the degree of precipitation and dislocation density. Two variants of thermomechanical processing with different final rolling temperatures were carried out. Samples were studied using electrochemical isolation with an atomic absorption spectrometer, transmission electron microscopy, X-ray diffraction analysis, and universal tensile testing with a thermographic camera. The results show that the increase in the density of dislocations before the onset of intense precipitation is insignificant because the recrystallization process takes place simultaneously. It increases with the onset of strain-induced precipitation. In this paper, it is shown that niobium precipitates determine the density of dislocations. The appearance of Lüders bands was noticed as a consequence of the interaction between niobium precipitates and dislocations during the subsequent cold deformation. In both variants of the industrial process performed on the cold deformed strip, Lüders bands appeared.